Abstract Abstract: This paper studied the pricing problem of social network platforms with the co-existence of positive network effects of resources and negative network effects of advertisements. A duopoly competition model was built and the Nash equilibrium of the game was obtained. In equilibrium, the variation of quantities of resources, advertisements, and platform profits were then analyzed. It is found out that the ratio of resources to advertisement has an important impact on platforms. The platforms offer network users services free of charge, whereas the actual costs are shifted onto advertisers through advertising fees. As the ratio of resources to advertisement increases, the variation of quantities of resources and advertisement are not monotonous, instead there exists a turning point. In order to maximize platform profits, the optimal ratio of resources to advertisement lies at the boundary of feasible region. The results of this paper help to reveal how platforms balance resources and advertisements.
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